Aave and Morpho submit competing DeFi lending frameworks to SEC, split on securities law approach

Aave and Morpho submitted separate DeFi lending legal frameworks to the SEC, taking opposing positions on securities law. Aave, with Kamino and Veda Labs, argues deposits fail both the Howey and Reves tests—no shared venture, no promise to repay—asking the SEC to confirm existing law with no exemption. Morpho, in a CCI coalition with Bitwise and Galaxy, proposes ten conditions for a safe zone based on control, concedes vaults may be shared ventures and lending positions may be notes, and requests exemptive relief plus a compliance entity. The author argues Morpho's approach concedes ground and rewards frozen code, while Aave's keeps DeFi permissionless.

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• SEC
• DeFi
• Morpho